Chapter 4The Scope of Advertising:

From Local to Global

William F. Arens Michael F. Weigold Christian ArensMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

4-2

Chapter Overview

Introduces the people and groups

who work in advertising

4-3

Chapter Objectives

Describe stages in agency/client relationship

Define the main types of ad agenciesDiscuss how agencies get clients, make money

Explain what people do in ad agencies

Describe factors that affect agency/client relationship

Describe what advertisers do and detail org structure

Identify the various groups in advertising and their relationships

Explain how the media and suppliers help

Q. 1. What are the four distinct groups in the advertising

business?

4-5

The Advertising Industry: Organizations

Advertisers

Agencies

Media

Suppliers

4-6

The Advertising Industry: People

Sales personnel

Researchers

Accountants

Managers

Most often employed by advertisers, not clients:

Computer scientists

Writers

Artists

Musicians

Photographers

Performers

AttorneysCinematographers

Q. 2. What is Local Advertising?

4-8

Advertisers: Local

Advertising done by local businesses in a particular city or county targeting customers in their

geographic area

4-9

Advertisers: Local

An ad for Rubio’s Baja Grill showcases its unique products

4-10

Advertisers: Local

Typical structure of small advertisers

with high volumes of work

Q. 3. What are the four types of Local Advertisers?

4-12

Advertisers: Local

Specialty businesses

Government and nonprofits

Franchisees and dealers

Sellers of branded merchandise

Q. 4. What are the three types of Local Advertising?

4-14

Regular price-line, sale, or clearance

Types of Local Advertising

Create favorable image, increase awareness, foster goodwill

Recruit employees, offer services, sell merchandise

ClassifiedInstitutional

Product

Ads can be created locally using local experts orads can be created cooperatively

Q. 5. What are the two kinds of Cooperative Advertising?

4-16

Advertisers: Cooperative

Vertical Co-opHorizontal Co-opFirms in the same business or part of town advertise jointly

National brand association

Manufacturer provides complete ad & shares costs

Professional quality ads

Expands advertising budget

Q. 6. Define Regional Advertisers and National Advertisers.

4-18

Advertisers: Regional and National

Regional: one or several states

National: several regionsor entire country

4-19

4-19

Advertisers: Regional and National

Top 10 advertisers in the U.S. by total U.S. advertising in 2005http://adage.com/datacenter/datapopup.php?article_id=127910

Insert ex. 4-2, p. 103

Top 10 U.S. Advertisers

Position = 2.9” horiz, 1.5” vertical

Size = 5.7” WIDE

Resolution = 300 dpi

4-20

Advertisers: Regional and National

Top 10 advertisers in the U.S. Ranked by total U.S. advertising in 2006 http://www.marketingcharts.com/wp/wp-content/uploads/2009/09/tns-mi-top-10-advertisers-h1-2009.jpg

4-21

Advertisers: Regional and National

Q. 7. What are the differences between Regional and National

Advertisers?

4-23

Advertisers: Regional and National

4-24

Centralized Department Structure

4-25

Decentralized Department Structure

4-26

Transnational Advertising Structure

• Divisions are responsible for their own product lines, marketing, and profits

• Each division has an advertising department to coordinate sales and promotion across brands

• The corporate advertising department provides information and guidance

4-27

Global Advertising Strategy

• Assumption that product use and needs are universal

• Standardized approach in all countries

• Extensive research to ensure ad is basic and universal

• Appeal to basic human emotions and interests

Q. 8. Define an Advertising Agency.

4-29

Advertising Agency

• An independent organization of creative people and businesspeople who specialize in developing and preparing marketing and advertising plans, advertisements and other promotional tools.

4-30

Roles of Ad Agencies

Ad Agenc

y

Independent

Business staff;

creative staff

Contracts for media space and

time

Client oriented

Understands global

marketing

Q. 9. What are the different types of agencies?

4-32

Agencies: Types

SpecialtyBoutiques Media

BuyersInteractive

Range of Services

ConsumerBTB

ReachLocal National

Regional

Global

International

Q. 10. What are the various departments in an agency?

4-34

Agencies: People

Account Research and Planning

Traffic Management

Administration

Account Management

Other Services

Advertising Production

Media Planning and Buying

Creative Concepts

4-35

Ad Agency Structure

Q. 11. What is the compensation structure in an ad agency?

4-37

Agencies: Compensation

Ad ratecard price:$100,000

Agencybuys adat 15%discount:$85,000

Agencybills clientfull ad amount:$100,000

Agency keeps $15,000difference

Media Commissions

4-38

Agencies: Compensation

MarkupsAgencybuys materialsforcampaign

Materialscost$85,000

Agencybills for materials plus a17.65%markup

Agency bills $100,000(cost plus markup)

4-39

Agencies: Compensation

Fees

Fee-commission combination

Straight-fee (retainer) method

Incentive system

4-40

Agencies: In-House

Pros

May save money

Allows tighter control

May allow greater attention to the brand

Lower creative quality

Less experience and talent

Loss of objectivity

Cons

Q. 12. How do agencies get clients?

4-42

Agencies: Client Relationships

ReferralsPresentations

Community relationsand networking

Solicitation

Finding and Attracting New Clients

Q. 13. What are the stages in the Client/Agency relationship?

4-44

Client-Agency Relationship Stages

DevelopmentPre-relationship

TerminationMaintenance

4-45

Client/Agency Relationship Factors

Communication

Conduct

Chemistry

Changes

The Four Cs

Q. 14. Who are some of the suppliers in advertising?

4-47

Suppliers

Art studios andweb designers

Printers andrelated specialists

Film and videohouses

Researchcompanies

Q. 15. What are the various categories of media?

4-49

Media

Out-of-home

Digital interactive

Electronic

Print

Direct mail

Other

Social

4-50

Media Around the World

McDonald’s honors an Islamic observance